Economics 2nd half

Question 1

What is living standard

Answer 1

The overall quality of life experienced by a population

Question 2

what is the difference between material and non material living standards

Answer 2

Material living standards are tangible and contribute to comfortable life style eg housing and transport. Non material living standards contribute to overall well being eg health care and safety

Question 3

What is income

Answer 3

The amount someone earns in certain period of time

Question 4

What is wealth

Answer 4

The total value of assests you own

Question 5

What is a quintile

Answer 5

A 20% chunk of population bases on wealth or income

Question 6

What is the gini coefficient

Answer 6

A number that tells us how evenly income is shared in a country. The closer to 0 the better

Question 7

What is a mortgage

Answer 7

A loan for a person to by a house

Question 8

What is the principal

Answer 8

The amount you still owe the bank

Question 9

What is interest

Answer 9

The cost of borrowing money. Paid monthly to the bank on top of principal payments

Question 10

What is the monetary policy

Answer 10

A strategy used to keep inflation rates steady

Question 11

How does the monetary policy work

Answer 11

The RBA changing the cash rate to then cause increase in spending or a decrease in spending

Question 12

How many times does the RBA meet a year, and how much can they change the cash rate by

Answer 12

8, and they can change it in 0.25 increments

Question 13

What is the cash rate

Answer 13

The interest rate the RBA charges to banks

Question 14

List the steps of the monetary policy

Answer 14

If the inflation is too low, the RBA decreases cash rate, people then borrow more and save less increasing consumption and this increases inflation. If the inflation is too high the RBA increases the cash rate and people borrow less and save more decreasing consumption and decreasing inflation

Question 15

How does the cash rate affect savings

Answer 15

If the cash rate is high saving will earn more interest, if it is low then they will earn less

Question 16

What is expansionary monetary policy

Answer 16

When the RBA wants to encourage spending and increase inflation, it involves lowering the cost of borrowing and lowering the interest earned in savings

Question 17

What is contractionary monetary policy

Answer 17

When the RBA wants to discourage spending and decrease inflation, it involves increasing the cost of borrowing and increasing the interest earned in savings

Question 18

What is fiscal policy

Answer 18

When the government changes the type and amount of spending and taxation in the country to manage GDP, inflation, and unemployment

Question 19

Who is in charge of fiscal policy

Answer 19

The federal government, specifically the treasurer and the prime minister

Question 20

What is the aim of the fiscal policy

Answer 20

To stabilise the economy during booms and busts

Question 21

What is expansionary fiscal policy

Answer 21

When the government wants to make the busts less extreme. It involves decreasing taxation and increasing government spending. The increase in government spending will create more jobs and the decrease in taxes will make everyone have more money and increase demand

Question 22

What is contractionary fiscal policy

Answer 22

When the government wants to make the booms less extreme. It involves increasing taxation and decreasing government spending. The increase in government spending will decrease the amount of jobs and the increase in taxes will make everyone have less money and lower demand

Question 23

What is the governments main sources of revenue

Answer 23

Income tax (48%), company tax (21%) and GST (12%)

Question 24

What is the government main areas of spenditure

Answer 24

Social security (36%), health (15%), education (7%), defence (6%)

Question 25

How do you calculate income tax

Answer 25

Determine marginal tax bracket, find out how much money they make in the top tax bracket, multiply by the tax rate and add the answer to the amount of tax before the tax bracket

Question 26

What is marginal tax rate

Answer 26

The highest percentage rate of tax you pay

Question 27

What is labour productivity

Answer 27

The amount of G+S that a worker produces in a given time

Question 28

What does an increase in the labour productivity do

Answer 28

It increases frim revenue, and it also increase GDP

Question 29

How does employment, and education affect living standards

Answer 29

Employment affects living standards because when people are unemployed they can't but as much things and they are under financial pressure. Education affects living standards because it increasing earning potential and access to better jobs, allowing people to gain more money and spend it.

Question 30

What is the link between macroeconomic performance and living standards

Answer 30

When macroeconomic performs well living standards are high as their is less unemployment, higher GDP and a good level of inflation

Question 31

What are some countrys with high and low gini coefficients

Answer 31

High are south africa, colombia and botswana. Low are slovenia, slovakia and uk

Question 32

What is a quintile

Answer 32

5 groups of 20% that show how income or wealth is distributed among a population

Question 33

Is wealth or income unevenly distributed

Answer 33

Wealth

Question 34

What does income inequality contribute to

Answer 34

Wealth inequality in the long term

Question 35

What are 2 policies the gov uses to decrease income inequality

Answer 35

Raising taxes in the upper tax brackets, and increasing social security payments

Question 36

what is macroeconomic gov policies and what is microeconomic gov policies

Answer 36

Macroeconomic government policies focus on the overall economy, like economic growth, inflation, and unemployment, while microeconomic policies target specific sectors or markets improving effiecieny or failures

Question 37

How does labour productivity increase GDP

Answer 37

It increases GDP because GDP is the total value of final goods and services produced in a given time, and labour productivity is how many goods and services a worker can produce, so the higher the labour productivity the higher GDP

Question 38

How can businesses increase labour productivity

Answer 38

Staff training, work felxibility, increased capital equipment

Question 39

What are two australian policies used to improve producitivty in the work place

Answer 39

Tax incentives for business to invest in new capital, funding research, and paying for education